The TSX Index is at all-time highs yet again. This is surprising to some, but thankfully, opportunities still exist. Here are my four top TSX stock picks, ones that remain attractively valued despite the record TSX Index levels being hit once again.
Cineplex
Canada’s largest movie exhibition company, Cineplex Inc. (TSX: CGX), has had a rough ride over the last few years. The emergence of streaming, the pandemic, and the writer’s strike all pressured the stock enormously. Today, the stock trades 68% lower than right before the pandemic hit and 80% lower than 2017 highs. That’s a big fall.
Yet, I think the outlook is bright. Cineplex has come out of the pandemic with a business model that has been tweaked and adjusted for new realities. The business is an increasingly diversified one, with non-movie exhibition revenue making up approximately 25% of Cineplex’s total revenue in 2023. This has given Cineplex exposure to higher growth businesses, such as its location-based entertainment business, which saw its revenue increase 19% in 2023.
But back to the movie exhibition business. Here we’re seeing a recovery that continues to pick up steam. This is evidenced in Cineplex’s August 2024 box office revenues, which came in at $67.2 million, 119% of August 2019 levels. This is big and it speaks to the fact that Cineplex’s business is being unreasonably counted out by the market. Therefore, the stock is undervalued and remains one of my top TSX stocks to buy right now.
Suncor
Next, we have Suncor Inc. (TSX: SU), Canada’s leading integrated oil and gas companies, which has been making a comeback in recent years.
This integrated business gives Suncor an edge, as its two businesses in different parts of the oil and gas chain complement each other. This results in a more stable and steady profile, which is something that investors have placed a premium on in past years.
Today, Suncor has the task of proving itself once again. And in my view, this is exactly what the company has been doing. In the company’s latest quarter, it blew past expectations once again – an EPS of $1.27 compared to $0.96 in the prior years, and expectations that were calling for $1.08.
This TSX Index stock has rallied significantly in the last three years, up 94%. Yet, trading at a mere 10 times this year’s expected earnings, it remains undervalued in my view.
Tourmaline
As a natural gas producer, Tourmaline Oil Corp. (TSX: TOU) is in a sweet spot right now. While natural gas prices can be volatile and unpredictable, Tourmaline is benefitting from strong positive secular trends in the industry.
The opening up of the North American gas industry to global demand forces has been a very positive thing for producers like Tourmaline. Natural gas exports to Asian markets, for example, have boosted demand significantly. Further to this, LNG prices are significantly higher than North American natural gas prices, making companies like Tourmaline all the more profitable.
Tourmaline’s results in the last five years reflect this. Net income has increased 440% to $1.7 billion in 2023 and cash flow from operations increased 275% to $4.4 billion. Looking ahead, Tourmaline continues to pay excess cash flow to shareholders in the form of regular and special dividends.
Well Health Technologies
My last top TSX stock to buy right now is Well Health Technologies Corp. (TSX: WELL). It’s very different from my other picks in this article, but it’s one that I feel just as strongly about despite its short track record of profitability.
The company has been rapidly changing the health care system as we know it. The technologies offered by Well Health have reduced wait times, improved family care office profitability, and ultimately elevated the level of care offered to patients.
And Well Health’s results have reflected this success as strong demand continues to drive record-breaking results. Revenue in its latest quarter increased 42% to $243 million. Also, earnings per share came in at $0.43 versus a loss of $0.03 in the prior year, and versus expectations that were calling for the company to just break-even.
